Solar Development Volatility in the New Jersey RPS

Transcription

1 Solar Development Volatility in the New Jersey RPS B. Scott Hunter RE Program Administrator, New Jersey Board of Public Utilities September 23, 2014

2 Solar Development Volatility in the Context of NJ s RPS Presentation Outline: Introduction to the New Jersey Board of Public Utilities Policy Context for New Jersey s Renewable Portfolio Standards; > 1 Law (EDECA) & 3 + Amendments > 1 Set of Rules for 4 Markets (SRECs, ORECs, NJ Class I and NJ Class II) The Solar Act of 2012 Solar Development Volatility Proceeding & Report to the NJ Legislature

3 New Jersey Renewables Profile Policy, Programs, & Results, updated 7/31/14 Regulatory Framework Energy Master Plan Legislation: EDECA 99, OWEDA, SEAFCA 09 & Solar Act of 12 Regulations: RPS, NM & INX rules SBC/NJCEP Incentives & ERB NJ Class I Renewable Resources "Class I renewable energy" means electric energy produced from solar technologies, photovoltaic technologies, wind energy, fuel cells, geothermal technologies, wave or tidal action, small scale hydropower facilities with a capacity of three megawatts or less and put into service after the effective date of P.L.2012, c.24, and methane gas from landfills or a biomass facility, provided that the biomass is cultivated and harvested in a sustainable manner; Cumulative Installed Capacity (2001 to 2014) > 1.3 GWdc in 30,000 PV Solar > 30 MW in 18 Biopower > 9.5 MW in 43 Wind Energy > 1.5 MW in 8+ (NG) Fuel Cells Goals (or market potential) > 2,644 MWdc Solar PV (RPS: 4.10% in EY 28) > 1,100 MW Offshore Wind (OWEDA) > 200 MW Onshore Wind (2004 Market Potential Study) > 900 MW Biomass (2006 RU Market Potential Study)

4 Solar Success in New Jersey As of August 31, 2014, New Jersey has installed: ~ 30,191 renewable energy projects ~ 29,958 solar installed projects. Over 1.34 GW of sustainable energy is provided by solar, wind, biomass projects. Third largest solar market in the U.S., in terms of absolute capacity. Top five in capacity per capita and square mile!* (Environment America, July 2014)

5 The Solar Act of 2012 P.L. 2012, c., 24 signed July 23, 2012 Commonly understood to provide the Board tools to stabilize the solar market : implements the Energy Master Plan, preference to solar on brownfields, landfills, and other underutilized over facilities located on farmland and open space (Subsections t, s) changes the RPS SREC obligation for retail electricity suppliers and providers increasing requirements forward, i.e., (doubled in EY14 over EY13) in the near term and decreased in later years, (re) expressed as a percentage of retail sales (Subsection d (3)), extended banking of SRECs to five years (p), adds eligibility requirements for proposed facilities anticipating interconnection with the electric grid as direct grid supply, wholesale power generators to participate in the New Jersey SREC market (Subsections q, r, s), an investigation of approaches to mitigate solar development volatility ; (b) No more than 24 months following the date of enactment the board shall complete a proceeding to investigate approaches to mitigate solar development volatility and prepare and submit a report to the Legislature, detailing its findings and recommendations. As part of the proceeding, the board shall evaluate other techniques used nationally and internationally; (Subsection d (3) b).

6 Market Development Volatility Defined Analysis of Past Market Experience Market Development Volatility Drivers Example Policies CEEEP (MCG & SEA) Potential New Jersey Policy Options

7 Capacity Added (MW) CEEEP (MCG & SEA) S.D.V. = significant and rapid changes in rate of market capacity additions over time Analysis performed on a quarterly basis, other timeframes could be valid..provides some data smoothing but still allows for granularity. Aligns with standard economic and business reporting data Installed Capacity By Quarter % Qtr kw (dc) Chng 2010 Q1 24, Q2 28, % 2010 Q3 29, % 2010 Q4 49, % 2011 Q1 41, % 2011 Q2 79, % 2011 Q3 65, % 2011 Q4 119, % 2012 Q1 165, % 2012 Q2 101, % 2012 Q3 69, % 2012 Q4 81, % 2013 Q1 70, % 2013 Q2 61, % 2013 Q3 27, % 2013 Q4 42, % 2014 Q1 82, % 2014 Q2 52, % Avg. 40.4% Solar Capacity Added by Quarter

8 CEEEP (MCG & SEA)

9 CEEEP (MCG & SEA) SREC Price Volatility POTENTIAL MARKET VOLATILITY DRIVERS Concern that future instability could lead to boom bust development cycles Lack of Long term SREC Contracting Limited Market Transparency, key to functioning of competitive markets Potential for Regulatory Change; expectations for demand schedule changes in future, incentives to look beyond current supply and demand Vertical Demand Curve SREC Requirement Schedule 15 Year SREC Life Federal Tax Credit Expiration

10 MARKET DEVELOPMENT VOLATILITY MITIGANTS EXISTING MARKET CHARACTERISTICS EDC Programs Regular capacity additions promote market stability Agreements to adjust programs to prevent SREC market over-supply CEEEP (MCG & SEA) Solar Act Constraints on Grid-Supply Projects Reduces future potential for rapid market imbalances Relatively High Electricity Revenues; creates substantial and relatively stable PV project revenue stream BGS Auction Three Year Tranches supports 3 year forward SREC market hedging

11 CEEEP (MCG & SEA)

12 CEEEP (MCG & SEA)

13 CEEEP (MCG & SEA)

14 The Board s Solar Development Volatility Recommendations 1) After review of the CEEEP report, the Board directed staff to continue to: i. monitor solar market development activity and associated metrics including but not limited to capacity installation rates, SREC registration activity, EDC finance program participation, and SREC prices; and ii. work with stakeholders to identify gaps in New Jersey solar market data availability and improve data transparency to benefit market participants, decision makers and 2 ) Should significant solar development volatility extend for three consecutive quarters, with significant volatility defined as 40% or more change in quarter over quarter market capacity additions, the Board recommends the following action: i. Evaluating whether the quarterly changes in the market reflect typical market cycles and/or normal variations not requiring regulatory intervention; ii. Engaging stakeholders in developing appropriate responses such as limiting EDC sales of SRECs to recover costs for their EDC owned solar investments, exercising the Board s statutory authority to authorize retail electricity suppliers and providers to cease offering net metering for large solar electric generation facilities since the aggregate net metered capacity has exceeded 2.5% of statewide peak electricity demand, or consider other approaches to mitigating solar development volatility, and iii. Considering possible means of further restricting eligibility to participate in the SREC market of projects which present potential and significant SREC market impacts.

15 Thank You. Questions? Visit NJCleanEnergy.com Call 866-NJSMART